Part 1: Celeritas Case Analysis

22 Dec No Comments

Celeritas Case Analysis

Author:

Jack Welch Management Institute

JWI 510: Leadership in the 21st Century

Professor’s Name:

Introduction

There are many of factors that can lead to decline of a company, and this case study is about organizational culture and leadership issues leading to dysfunctions in team, resulting is business issues. Celeritas Inc. was founded in 2003 by 3 MIT engineers, and soon became the leading company in enterprise network optimization, particularly in Wide Area Network (WAN) acceleration. In 2011, their market share was increased further by the onset of cloud computing as IT service delivery. With the departure of two of the three founders and CEO Philip Boyer at helm, Organizational Culture of Celeritas changed and the positive working relationships gave way to dysfunction like; lack of trust and communication, inconsistent decision making, confusion about goals and priorities and poor coordination among divisions (Beer and Vargs, 2011). Celeritas’s leading position in market became increasingly uncertain, as its growth started to decline and it lost market share to competitors. This instigated another review by CEO to diagnose the issues and transform the organization.

.Problem

CEO Philip Boyer believed in 3 main problems for the current state of his company: High employee turnover, Low Employee moral and lack of cooperation among divisions.

Philip hired Carla Reese as organizational consultant to revive the organization. As the Carla went on interviewing each of the 5 SVPs to search for the underlying issues, they reported Boyer’s ineffectiveness as a leader. He reportedly solicited information rather than opinions during weekly executive meetings, and makes all major decisions by himself. Also, a general dislike of Dave, the sales and marketing SVP was reported by all four of his fellow SVPs.

The issues were summarized by Carla into 4 main areas of concern:

General avoidance of direct communication between SVPs, supposedly due to different personality traits and backgrounds, led to a lack of trust and blame shifting when customers’ demands were not met, teamwork starts with building trust (Lencioni,1). This issue was profound in the case of Dave who did not get interact well with other SVP’s neither did he get along well with the CEO Philip. In order to restore the teams’ channels of communication, the consultant would need to apply concepts of organizational behavior in relation with trust and teamwork, by urging the employees to embrace the differences.

  • Lack of trust and communication

The SVPs were seeking Boyer individually to make their case, which yielded to a sense of partisanship and inequity in strategic decision-making, lack of transparency, as well as frustration due to frequent decision reversals. SVPs reported not being involved in the corporate goals and strategy-related decision-making during meetings, as the CEO was the sole decision-maker, which means there was no clear decision making model in place (Vroon-Yetton, 1973).

  • Inconsistent decision making and follow-through

The communications of the company’s goals were considered by SVPs as too broad and left room for conflicting interpretations, thus creating divisions. Also, no guidance was provided as to how to achieve these goals, two very important aspects were lacking within the company “Mission and Value” (Welch, 2005).

  • Confusion about goals and priorities

Philip’s description of Celeritas’s early days under its 3 cofounders seemed to exhibit a culture of Authoritative style of leadership (Goleman, Leadership that gets results) where he discussed issues with his founding partners and decisions were implemented. As the company grew with its cofounders leaving, Philip practiced more Coercive style of leadership, where spontaneous collaboration and horizontal flow of information across divisions became virtually nonexistent. This lack of a unified strategy destabilized the corporate culture and its underlying espoused values. From an organizational behavior stand point, individual SVP’s were setting their own goals, which eroded focus on collective success (Dysfunction 5, Lenicioni). This caused a considerable friction among teams leading to lack of engagement and a high turnover rate.

  • Poor coordination among business functions and units

Analysis of the Problem

Team/IndividualIssues / Lenicioni’s DysfunctionDiagnosis explained
CEOCoercive Style of leadership with limited display of any Emotional intelligence (Goleman,1) and no clear Mission & Vision for the organizationPhilip being the CEO struggled with setting clear strategies and showing the big picture to his team, he also did not trust his SVP’s to help him with strategic decision making. The situation was bad to an extent that Philip had personal animosity towards Dave.
Finance TeamAbsence of trust & communicationThis team did not trust Boyce and the leadership on his indecisive entry into the cloud technology market. They also did not believe that other teams effectively communicated among themselves to set priorities.
Research and ScienceLack of CommitmentThe technology SVP found that his team was struggling due to many of the decisions that were reversed based on one-on-one meetings of other by SVP’s with Boyce and there was limited commitment on any collective decisions made.  
Engineering & TechnologyFear of ConflictCarlos the engineering SVP was clearly avoiding discussions with Dave in sales because he felt that Dave would become defensive on any feedback and carry personal animosity.
OperationsFear of ConflictIt was the same case here as Carlos’s team, Harper the Ops SVP was avoiding Dave, and business decisions were being made in isolation.
Sales and MarketingLack of commitment, Dysfunction and Avoidance of accountabilityDave rarely cared about collective results and it was all about his target and ways and means to achieve those. He would not care about other teams priorities and engage in consensus based decision making. Eventually when the sales were down Dave would also blame other teams for lack of support and inappropriate funding for his team.

CEO’s Leadership Style

On exit of his founding partners Philip Boyer the, who is an engineer by profession with limited management experience, largely displayed Coercive Style of Management (Goleman 1). Celeritas in its initial years with co-founders was an organization which portrayed teamwork and positive working relationships. On taking over from co-founders Philip Boyer he did not make any effort in Building a High-Performance team (Wk4, lecture notes). Further with Philip’s Coercive style of leadership meant most of the decisions seemed to be Autocratic-A1 (Vroom-Yetton 1973), with lack basic emotional intelligence skills like Motivation, Tough Empathy and Self –Awareness(Goleman,1) , which created absence of Trust, fear of Conflict, Avoidance of accountability and Inattention to results (Goleman,1)

Contrasting Consultant and CEO Leadership Styles

Carla Reese on the other hand to gain the Trust and Understanding of each SVP’s displayed a mix of Affiliative and Democratic style of leadership (Goleman 1). She step up one to one meeting with SVP’s, listened to them and was successful is getting to know some revealing comments from each SVP about Philip Boyer and other colleagues in management team. This style of leadership was complete opposite leadership Philip Boyer, one which the organization was not used you. It is also evident that this style worked better than that of Philip’s because Carla was able to understand the issues better in form of Lack of trust and communication, Inconsistent decision making, Confusion about company goals, Poor coordination among business functions Vs that of Philip Boyer who did not understand what was the root cause high employee turnover, low morale across the company, and lack of cooperation among divisions.

Sales and Marketing VP’s Ineffective Influence

The fact of the matter is that sales were suffering and Dave was at the forefront of it and would have been the first to feel the pressure for some time. There are many things which Dave did and back fired during the meeting but here is how Dave could have presented his position differently, and perhaps, would have received a more supportive response:

Speak with Candor (Wk5 Expert videos, Welch): Dave should have admitted that the organization (including him) has a problem and opened up without being rude and insulting.

Avoid competing behavior (TKI assessment): Dave should have use more of an Accommodating behavior with an element of self-sacrifice, while highlighting the organization issues.

Show more Emotional Intelligence (Goleman, 1): Philip could have showed tough empathy to situation and displayed self-awareness towards biases.

Handling of VP Meeting

The most important thing that Philip should have done prior to the VP meeting should have been to extend the fact finding services of Carla to VP’s, similar to that of what she did with SVP’s. This would have given Philip a good understanding and pulse of his operating team. Here Philip and Carla could also have used this information to understand the similarities and/or differences in outcomes form SVP meeting to that of what VP’s think. Also by knowing grievances of VP’s and incorporating some actions, Philip could have better planned his communication around intended change by being Prepared, Proactive (Leading in times of change, Forbes).

What If

I strongly feel that Philip was 100% justified in asking for Lloyd’s resignation irrespective of the third quarter results, due to following reasons:

Loss of Trust & Confidence with colleagues

Dave’s incompatible leadership style

Dave’s lack of emotional intelligence

Dave inability to speak with Candor

References

Michael Beer, 2011, Celeritas, Inc.: Leadership challenges in a fast-growth industry, Harvard Business Review

Daniel Goleman, 1998, What Makes a Leader, Harvard Business Review

Patrick Lencioni, 2002, The five dysfunctions of a team: A leadership fable.

Vroom Yetton, 1973, deciding how to decide

Jack Welch, 2005, Winning

Daniel Goleman, Leadership that get results

Building a High performance Team, Wk 4 JWI Lecture notes

Speaking with Candor – Wk 5 Expert Videos, Jack Welch

TKI Assessment

https://www.forbes.com/sites/ellevate/2018/08/01/the-4-ps-of-effective-change-management/#1f24da414b08




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